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Welcome to this week’s edition of our Tuesday Top 5, Econ4U’s weekly tips post to help you manage your money in five easy steps.
You’re probably not thinking about tax season right now, but fall is a great time to revisit your tax planning strategies. Here are a few tips to make the most of your money before December 31 creeps up on you.
- Stock up on health supplies. If you participate in a company-sponsored flexible spending account (FSA) for tax-free health expenses, start thinking about ways to avoid leaving money on the table. Stumped about what to get with your dough? Glasses or contacts, cold medicine, first-aid kits, ice packs for treating injuries, and heart-rate monitors all qualify. Drugstore.com even stocks a FSA store full of qualifying goodies. But do it fast: Starting in 2011, you won’t be able to run up a drugstore bill with your FSA dollars. The new health-care law prohibits spending FSA money on anything you don’t have a prescription for (with insulin as the exception).
- Make your home more energy efficient. Holiday weekends (like the one three days from now) are a great time to buy new appliances at a steep discount. And through the end of the year, you can qualify for a 30 percent credit (up to $1,500) on approved doors, windows, and roofs as well as high-efficiency furnaces, water heaters, stoves, and heating and air conditioning units installed in your primary residence.
- Save tax dollars when you refinance your home. If you’ve taken advantage of low mortgage rates this year to refinance your home, don’t forget that you can deduct all unamortized points on an old refinancing as well as points on the new loan.
- Identify charities you want to support. Charitable donations are deductible through December 31 for the current tax year, but pouring money into worthy coffers can be a low priority at year end when you’re busy playing Santa. Make your annual donations now before your wallet starts feeling pinched by the holidays.
- Begin to max out your retirement savings. If you qualify for an IRA or Roth IRA and haven’t begun making contributions for 2010 yet, start by socking away a little right now. The contribution limit is $5,000 if you’re under age 50, and you have until April 15, 2011 to get it all in there. So put away $625 a month for the next eight months to max the fund out — it will hurt a lot less than trying to come up with $5,000 on Tax Day.
